Comfort Ekeleme
23 December 2011
Central Bank of Nigeria (CBN) yesterday said that the total amount of money paid to marketers as subsidy in the last 11 months stood at $8 billion.
CBN Governor, Mallam Sanusi Lamido Sanusi who disclosed this in Lagos yesterday at town hall meeting organized by Newspaper proprietors association of Nigeria (NPAN) also noted that between January and November this year a total foreign exchange in excess of $8 billion has been sold.
Speaking on the theme “Removal of Petroleum Subsidy in Whose Interest”, Sanusi expressed the need for the country to have stability in the economy, adding that if the oil crashes again by 30 per cent it would be difficult for the government to pay workers salaries, saying the country would experience hardship.
“Removing the fuel subsidy is not some magic silver bullet that can solve all the problems of Nigeria … but the burden is unsustainable on the government’s finances. We can keep paying the subsidy into 2015, but the next government will be saddled with the debt,” he said.
He acknowledged the move was likely to prove unpopular, but asked: “Is it our responsibility to pursue the popular policy or the policy that is right for Nigeria?”
He stated that in a situation where the country subsidized consumer, the government is indirectly increasing production outside the country, stressing that subsidizing local products in the country would go a long way to impact positively on the growth of the economy.
Sanusi however, pointed out the government spends the entire money it borrowed yearly for subsidizing petroleum products.
He further noted that the major contributory factor to the financial crisis in the banking sector was their exposure to capital market and oil and gas.
Sanusi who was not comfortable with the amount of money being paid as subsidy said that Nigeria was the only country the government pay demurrage, stressing that the sector was only a place an idiot can make money.
He said that some government officials cannot say the actual prices of fuel in the market because they do not buy the product, stressing that the prices of fuel in Kano was N65 but outside the town it cost about N100 per litre.
Sanusi pointed out that though we are selling fuel at N65 per litre, in other neighboring countries like Republic of Cameroon they are selling N140 per litre so an importer can easily import fuel and transfer it to the country for more profit making.
He stated that the country has created an opportunity for rent seeking, and increase in corruption, noting that once the citizens were not buying fuel at the rate N65 price , it means that the country does not subsidy but rent.
Coordinating Minister for the Economy, Dr Ngozi Okonjo- Iweala deregulation would open up the market thereby creating jobs for the citizens.
She however said that the government policy would also reduce smuggling activities to the neighboring countries and reduces fraud and rent seeking behavior in the country.
She stated that although the federal government has issued licenses to 20 marketers to build refineries but they failed to do so because the market was not attractive.
The minister for finance stated that between 2006-2011 the federal government has spend N3.7 trillion on subsidy, stressing that in October this year alone N1.3 trillion was spent and it was estimated that by the end of this year the country would have spend N1.43 trillion.
Okonjo-Iweala stated that the money for the subsidy could be used in funding capital projects and use to reduce deficit. She explained that although N852 billion was borrowed this year to fund budget deficit about N1.1 trillion is expected to be borrow next year, noting that constant borrowing is not healthy for the economy.
Also speaking the governor of Edo State Adams Oshiomhole, said that removal of subsidy would be in the interest of everybody and it could be interest of nobody.
He said that nobody in the country has the power to question abuses going on in the oil sector, noting those who are responsible to audit their account even compromise in one way or the other.
Commending the present administration for maintaining the prices fuel at stable rate, he stated everything in the country has gone up in the last five years except petroleum, stressing that during the past regime the fuel increased more than five times
Kicking against subsidy removal, Olisa Agbakoba who spoke on behalf of the civil society noted that although there was nothing wrong with the new arrangement but the government still needs to be more responsible to the masses.
“According to him if you want to put burden on us first show us the one you are carrying. Government have done anything for me since I was born and what do they expect to do for us now,” he said.
Also the President of Silver Bird Group, Ben Murray Bruce who spoke on behalf of the masses said that transport fare would be higher after subsidy removal , noting that the average transport fare in the country ranged between N50 to N90.00, and it is estimated that Nigerians spend N30-N50 billion on transport alone.
He however said that if the government want to remove the fuel subsidy it means that it has subsidized transportation in the country.
In his own contribution, Isah Aremu who spoke from Labour angle said that removal of the subsidy would worsen the standard of living of Nigerians, stressing that the prices of transportation food stuff would increase thereby cause hardship and make life more difficult for citizens
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